Israelis See Little Movement Yet Toward Accord with U.S. on Loans

Government officials here are clearly dismayed by the lack of progress in negotiations with the Bush administration over the U.S. terms for underwriting $10 billion in loans Israel wants over the next five years to help absorb immigrants.

Israel’s ambassador in Washington, Zalman Shoval, had his third private meeting on the subject Friday with U.S. Secretary of State James Baker.

But neither side seems to have given ground on the major obstacle: U.S. insistence that Israel halt its settlement-building program in the West Bank and Gaza Strip.

Shoval left the State Department on Friday afternoon saying, “There is no agreement yet. We will have another talk.” He declined further comment.

Rumors floated in Jerusalem over the weekend that Shoval’s dialogue with Baker was becoming increasingly harsh. But that could not be confirmed inasmuch as the two men met in complete privacy, with no aides present.

In any case, government circles here are bracing for a tough administration line when Baker testifies before Congress on Monday. Although the loans issue was not formally raised at Sunday’s Cabinet meeting, it was very much in the air.

Several ministers sounded pessimistic in their comments to reporters. “We will not be dictated to,” Absorption Minister Yitzhak Peretz declared, echoing the line taken by most coalition politicians.

The administration’s position is that it will support Israel’s loan guarantee request in principle to help it absorb the 1 million immigrants, mainly from the former Soviet Union, expected to arrive here over the next five years.

But the administration insists on three conditions: Israel must complete only those housing units in the territories already under construction; it must halt new housing starts; and it must accept that the United States would deduct from the amount of the loans guaranteed annually one dollar for every dollar Israel spends for Jewish settlement on the disputed land.

U.S. JEWS OPPOSE LINKAGE

Israel’s top economic official, Bank of Israel Governor Ya’acov Frankel, is presently in Washington leading an Israeli diplomatic and lobbying effort in support of the loan guarantees.

Meanwhile, members of the Conference of Presidents of Major American Jewish Organizations, here on a brief study mission, are understood to be counseling moderation on the settlements issue in their informal contacts with Israeli government figures.

But publicly, Jewish leaders gathering here for both the Conference of Presidents mission and for a World Jewish Congress conference are closing ranks behind Israel’s loan request. They insist that the U.S. guarantees not be linked to the issue of Jewish settlements in the territories.

Shoshana Cardin, chairman of the Conference of Presidents, has disapproved of the linkage in strong terms, saying political issues should not interfere with a pressing request for humanitarian assistance.

That position was echoed here by Evelyn Sommer, head of the WJC’s America Section, and Jean Kahn, president of the European Jewish Congress and of CRIF, the representative council of French Jewish organizations.

Israel Radio quoted an unnamed “top American Jewish official” Sunday as saying that President Bush “was endangering the peace process with his tough position on the loan guarantees Israel has requested.”

There is also concern here that during the bilateral peace talks in Washington this week the Arab delegations, especially the Palestinians, will demand that the settlement dispute be dealt with forthwith.

So far, they have shown forbearance on that issue. But with the Bush administration and some members of Congress lined up against the Israeli government’s settlement policies, the Arabs might decide the moment is opportune to “make an issue” of the settlements.

Prime Minister YItzhak Shamir did not refer directly to the loan guarantees in a speech Sunday to the WJC Executive. But he urged world Jewry’s “maximum financial involvement” in Israel, through “contribution and investment, skill and experience.”